Forms of business organization

of service

Public Corporations

Merits

• Operational Autonomy
• Public Accountability
• Flexibility of Operations
• Easy to raise funds by issuing bonds
• Works with service motto

Public Corporations

Demerits

• Lack of Autonomy in practice
• Unresponsive to consumer interests
• Difficulty in changing the act

Government companies

Merits:

• Easy to Form
• Flexibility of raising Capital
• Operational Flexibility: No bureacracy,prompt decisions.
• Facilitates Private Participation 

Demerits:

• Lack of Accountability
• Absence of Real Autonomy
• lack of Professional skills

Government companies

Definition

A govt company is a company in which 51% of the paid up share capital is central/state govt.

Features:

• Formation- as per provisions of The companies act,1956.
• Management and Control- Board of Directors appointed by govt and elected by shareholders
• Finance: Can raise funds from govt or public

Factors Governing Choice of Form of  Business Organisation

The choice of the form of business is governed by several interrelated and interdependent factors :-

• The nature of business is the most important factor. Businesses providing direct services like tailors, restaurants and professional services like doctors, lawyers are generally organised as proprietary concerns. While, businesses requiring pooling of skills and funds like accounting firms are better organised as partnerships. Manufacturing organisations of large size are more commonly set up as private and public companies.